Insurance policy premiums are typically calculated based on the vehicle type, driver history and home address. The premium is typically independent of the number of miles driven by the driver or relies upon the driver estimating how many miles are driven in a year. Insurance policy premiums are also typically paid on the basis of time. For example, an insurance policy can be paid every six months thereby giving the insured party six months of insurance coverage.
Various government authorities are studying the concept of charging drivers usage fees based upon the number of miles driven. The term, “Pay as you Drive”, is commonly used to refer to such a payment system. As newer more fuel efficient vehicles, such as hybrid vehicles, use less fuel, it is expected that fuel tax revenue will decline and have to be replaced by another source. Charging drivers by the number of miles driven can be done through various means such as road tolls and parking tolls. Charging drivers usage fees based upon the number of miles driven can be used to control vehicle congestion, vehicle usage and vehicle emissions.